In a June 3, 2022 court filing, Kabbage, Inc. (doing business as KServicing), a fintech lender, disclosed that it is under investigation by the U.S. Department of Justice (“DOJ”) under the False Claims Act. The investigation, Kabbage further disclosed, relates to its Paycheck Protection Program (“PPP”) loan approval practices. Three months earlier, the DOJ charged a former CEO of a fintech lender (MBE Capital Partners) with wire fraud, bank fraud and making false statements to the Small Business Administration (“SBA”), in what we believe is the first criminal prosecution involving the activities of a PPP lender.
These and other recent developments are part of what appears to be a significant new DOJ initiative: enforcement activity targeting fintech firms and other financial institutions that processed loans under the PPP. The PPP was enacted as part of the CARES Act on March 27, 2020, in response to Covid-19 and was launched by the Small Business Administration (“SBA”) on April 3, 2020. Nearly $800 billion was disbursed under the PPP through the close of the program in May 2021.
Recent reports suggest that the DOJ’s focus is not solely on the lenders cited above. Meanwhile, the House Select Subcommittee on the Coronavirus Crisis has announced investigations of at least six fintech lenders: Kabbage, BlueVine, Cross River Bank, Celtic Bank, Blue Acorn PPP, and Womply. Moreover, certain investigative media reports and academic papers have underscored concerns both about...
The author and behavioural scientist, Gad Saad, has just published a book on what he calls “suicidal empathy”. He says that “a society dies when it cares more about exhibiting infinite tolerance a...